• The tax treatment of health insurance: Obama vs. Romney

    How would President Obama and Mitt Romney each prefer to handle the tax treatment of health insurance premiums? Are their views different or the same? If you can’t answer those questions, check out my latest post on the JAMA blog in which I explain and then grade the candidates’ plans.

    @afrakt

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    • Helpful article! Here’s an article from Kaiser Health News about the differences in the Obama and Ryan Medicare policies. Thought this might be a nice addition to your post: http://www.kaiserhealthnews.org/Stories/2012/May/04/obama-ryan-controlling-federal-medicare-spending-faq.aspx?cid=FBKaiserHeatlh

    • If you purchase health insurance as a non-employed individual, yes, it is taxable.

      If you purchase it as a free lance–as a user of Schedule C, that is–you can deduct the cost of the Health insurance Premium from Income, making it, effectively, before-tax.

      (I don’t remember if you can be a Statutory Employee and deduct self-paid HI Premia on Schedule A, but I wouldn’t be surprised.)

      The Romney “innovation” you (correctly) gave an ‘F’ should have very little effect; there are very few people who are in the position where they can and do buy HI “on the market” who are not also in a position to deduct it. (There are fewer since parents can keep children on their policies until they are 26.)

      Instead, they don’t buy it. And a refundable credit isn’t going to make the cash flows for that work much better.

    • I am at a loss to understand why otherwise sensible people who agree that sick people shouldn’t have to worry about access to healthcare nevertheless buy into this idea that many Americans are getting healthcare coverage that is too generous. What exactly does that mean?

      In my company, a colleague’s fiancee had a nonmalignant brain tumor behind her ear. In addition to a future of yearly MRI scans, she also needed therapy for issues with losing her balance, and the operation affected the nerves which produce tears, causing her eye to become extremely dry. There is a special contact lens one can buy that costs 10,000 dollars that would eliminate the need to constantly be putting ointment in her eye. Under our employers “less generous” coverage, only $1000 of that would be covered by insurance. Her employer had more generous coverage.

      Is that the kind of coverage you want to see eliminated? Aren’t Europeans and Asians who see doctors MORE than we do healthier? Isn’t it sick people who need the generous coverage?

      What we need is a tax on income to pay for healthcare plans. Not a tax on “generous” benefits that keep people from having to pay ever higher deductibles.

    • “What we need is a tax on income to pay for healthcare plans.”

      The Japanese have figured this out. My in-laws are all doctors (a quick count gets to 11 MDs and two dentists, and I’m probably missing some cousins), and they’re of a rather conservative bent, so I don’t talk politics much with them. But they are horrified by what they read about US health insurance situation. As medical professionals, they chafe at Japan’s draconian limits on charges (I’m currently being embarrassed at how little my dentist is allowed to charge me for redoing a crown), but they find the idea that anyone would even consider not providing affordable health care to the whole population completely insane.